In Practice June 27, 2017

Cafaro Greenleaf Offers Investment Selection and Monitoring Report

The system engages fiduciaries and advisers throughout the process, allowing them to see their plan investments and understand why each fund is becoming more or less aligned with their needs.
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Advisory firm Cafaro Greenleaf launched its new reporting system, Fiduciary Fit.

The system will allow retirement plan fiduciaries to have access to the complete documented process of their investment selection and monitoring, and also provide clients with fiduciary protection. Documentation of the process includes an explanation of the patented rating methodology used to evaluate candidate investments, a record of key input parameters, and rating results. 

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Fiduciary Fit is customized to each fiduciary by incorporating both what is important to it and its plan’s unique demographics into the analytics. The system engages fiduciaries and advisers throughout the process, allowing them to see their plan investments and understand why each fund is becoming more or less aligned with their needs. 

Clients will be able to become completely involved in their investment process, to track the progress of their investments, as well as learn about them. The unique system provides clients with complete visibility of their funds, along with any investment risks throughout the process. In addition, clients will receive quarterly reports that rate all of their investments and the entire plan. 

Jamie Greenleaf, Cafaro Greenleaf’s lead adviser and principal says, “When an individual goes to a financial planner, [the planner] asks lots of questions to understand [the person’s] needs. This enables [him] to design the most appropriate investment recommendations specific to [the] individual. The next generation of selection and monitoring investments for retirement plans should also strive to provide the same level of diligence for plans. We are excited to present our clients with Fiduciary Fit to engage them throughout their investment process!”

To request a demonstration, contact Brian Clark at bclark@cafarogreenleaf.com or call 800-401-4830.

Compliance June 27, 2017

Another Lawsuit Filed Against Washington University in St. Louis

This is the second lawsuit filed this month against the university regarding excessive fees in its 403(b) plan.
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Just weeks after being served with a lawsuit about allegedly excessive recordkeeping and investment fees for its 403(b) plan, Washington University in St. Louis is facing a lawsuit by another plan participant.

The strongly worded complaint says the plan fiduciaries “utterly abdicated their fiduciary duties to act prudently and loyally. Instead, they turned the plan over to the Teachers Insurance and Annuity Association of America and College Retirement Equities Fund (TIAA) and Vanguard Group Inc.” The complaint goes on to say that TIAA and Vanguard offered “scores of duplicative, expensive and underperforming” proprietary products.

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The lawsuit alleges that TIAA and Vanguard gained multiple layers of fees, but the plan and participants lost the potential growth they could have achieved if plan fiduciaries had properly discharged their duties under the Employee Retirement Income Security Act (ERISA).

The lawsuit says the plan participants were damaged because they paid higher recordkeeping fees than necessary as the plan fiduciaries had allowed TIAA and Vanguard to charge fees based on a percentage of assets rather than on the number of plan participants. In addition, the complaint says, for many funds, participants paid for the higher-cost, retail share class rather than the lower-share-class versions available to large investors such as the plan. It notes that the Washington University plan is one of the largest 403(b) plans in the country, with approximately 24,000 participants and $3.8 billion in assets.

The lawsuit also alleges that participants were offered an excessive number of duplicative funds, including poorly performing funds “bundled into the plan by TIAA and Vanguard mandates,” which enriched TIAA and Vanguard at the expense of plan participants.

The lawsuit seeks, on behalf of all participants in the plan, restoration of losses caused by the defendants’ breaches of fiduciary duties.

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